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Internal conflict consequences of parallel governments of operations and debt service

The governmental concept of balance of power of checks and balances works by dividing government branches each having distinct non-overlapping voting populations. In our government, the original concept was for two houses of congress with representative of one elected by individual voters and representatives of the other selected by the states. In the original concept, the presidency was selected by an electoral college of representatives sent by the various states, and the judicial branch was selected by the president but confirmed by the state-represented senate. Over time, the two legislator bodies became both represented by popular vote: one by equal-population districts and the other by statewide elections. Also, the presidency increasing is becoming a popular vote where the electors in the electoral college have no choice but to cast votes as determined by state elections, and with recent trends to obligate the electoral votes based on national vote totals. Eventually all three will be popularly elected by the same population of voters. The only difference between the branches are different sizes of represented districts and different definition of terms. Such a government is valid but I argue that it offers less power in terms of checks and balances. If the same population directly elects each distinct branch, then the concept of checks and balances depends on arguments within each individual.

Earlier, I imagined a different approach to organizing the government around two houses of legislatures where the two houses had distinct voting populations. One voting population would be what I called consumers: people who were entitled to income based on employment protections and unemployment insurance. The other voting population would be what I called producers: people who were self-sufficient in terms of cash flows and can live independently of government economic support. The two houses would propose laws that benefited their own populations at the expense of the opposite population but any laws would have to be accepted by the opposite house. This would produce a strong and lasting conflict for checks and balances for governing the population especially for the economic issues. In that post, I imagined an fiction of the economic consequences of creating two cultures: a coddled population of employees and a liberated population who must face risks alone.

I wrote that post as a metaphor for how I see modern political debate between two political parties in constant struggle to control all three representative bodies. I felt it would be better if we would recognize this conflict formally by granting each perspective a permanent house to replace the now outdated concepts of the House and Senate. Such a change would require a constitutional convention that I think would never happen because it eliminates the attractive current prospect of controlling the entire government.

Later, I identified a different natural division of the population based on age group instead of economics. I observed that coincident to the vibrant early history of the democracy, the voting population was very young. Recently, the government has become more sluggish and more reactive at the same time the voting population is aging. Today we have more political power in older populations who are more defensive about honoring precedents (both progressive and conservative concepts). As a result, the aging population restrains the government from rapidly adopting new approaches that would replace the old ones.

To restore the earlier vitality of the democracy, I proposed creating two governments with distinct voting populations based on age. The younger adults would have full control over the operational aspects of government, just as they did in our early history. The older adults would have full control over managing the obligations of debt and entitlements. In this case, the two governments are isolated in terms of managing their responsibilities. One government does not need approval of the other to make its laws. The checks and balances instead comes from the inter-dependency for financing each government. The operational government needs new debts to pay for investments (or war) but that debt must be provided by the government of obligations. Meanwhile, the government of managing obligations needs revenue from the operational government to help manage its obligations. Instead of reaching consensus on specific laws, the constraints will be on how much money the different governments permit to be exchanged.

The financial checks and balances between separate governments (with distinct voting populations) for operations and for debt service should be effective for controlling budgets for each government.

The two governments operate in parallel to serve their distinct objectives. There is no legislative linkage such as now where one house has to approve legislation by the other house. In this parallel government of age groups, each government passes its laws without any interference by the other government.

This concept preserve the modern ideal that a political persuasion can control the entire entire government. Within each government, there remains a needs to further distinguish voting populations for different branches in order to avoid excesses of one party rule. Ideally the different branches would have distinct constituencies where different voting populations select the representatives. This can still result in a one party controlling all of the branches but it will be hard to accomplish and hard to maintain over long time. The internal governing of each of the governments may experience divisive and unproductive governments. Even when this happens, the two governments can resolve their responsibilities (of operations or of obligation servicing) independently.

Because the governments are distinct and have distinct voting populations, I expect there to be conflicts between the two governments. Such conflicts will be similar to international conflicts but with major differences. The two governments have interspersed populations living in same geographic territories making physical conflict unlikely. For example, in extended families that young and old voters may live in the same house. Also, the two governments are not peers in conflict like nations would be. The operational government would have full control over all of the police and military. Although the government of debt obligations lacks an army, it controls access to new debts needed to finance the provisioning or deployment of forces. In the abstract, there is nothing stopping the armed operational government from conquering the obligation-servicing part of the government.

I assume that the division by age groups will provide sufficient disincentive from such a conquest. Current events in foreign countries challenge this assumption. Currently in many countries in the Middle East and Northern Africa, there are internal conflicts within nation-states (or former nation-states) where a good part of the conflict appears to be pitting a younger generation with access to arms against a generally older generation previously in control for maintaining the social institutions. The governing scenario is very different from my proposal but the age demographics are similar.

There is no natural constraint preventing younger adults from rebelling against generally older ones. My proposed approach could end as catastrophically, but assert some optimism that the two governments will recognize the mutual benefit of dividing government responsibilities between age groups.

I’ll fantasize that perhaps some of these violent conflicts of current events could have been averted if the governments had previously been formed with distinct areas of responsibilities between young and old populations within the same territory. The young will be free to impose stricter rules on their peers comparable to my discussion of stricter labor laws for young workers but will leave the other population alone. This may provide sufficient relief to prevent a catastrophic collapse of government. Or maybe not.

A different form of conflict can occur even if the two governments can peacefully coexist. The operational government by young adults will make most policies that directly affect mostly the younger adults. The debt-servicing government by older adults will make policies that direct affect mostly the older adults. This division of responsibility provides a new opportunity to confront the current debt problems by separately managing the budgets for operations and for obligations (such as entitlements). A conflict will emerge as a result of the political pain resulting from explicit persuasion the required inter-government transfers. Implicitly, such a request is a request for inter-generational transfer of wealth (between young and old). I argued earlier that the discomfort of this type of transfer would encourage each to find ways to self-fund their responsibilities as much as possible. Inevitably, inter-generational transfers will be necessary: the government of young will need loans, the government of old will need revenue to service past debts.

I think the current economic conditions in the European Union (EU) provides a rough analogy. In particular, I’m thinking about the conflict between heavily indebted countries (most noticeably represented by Greece) and heavy lending countries (most noticeably represented by Germany). The present problem is compounded because the debtor and the lender happen to also be geographically and culturally distinct and with historical record of armed conflict.

The EU conflict is primarily an economic one created by need to manage a common currency across many nations. However the conflicting economic conditions coincides with different national boundaries.

The EU effectively created two parallel governments: one to manage monetary policy across all nations and another to manage operational issues at the national level. In contrast to my concept of two parallel governments, the EU model allowed the individual nations to operate independently and that included the ability of each nation to negotiate its own debts. In my scheme, such operational governments would not be able to incur their own debts, but instead must request the debts from a government that pools all debts of all nations. This is not how EU operates.

The EU model could be more like my model by having the monetary policy include all obligations for debts and entitlements and to have these government democratically represented by voters who will not be able to participate democratically for the national operational governments. Voting constituency eligibility will cross all national boundaries and have a higher voting age requirement.

This revised EU would be responsible for all debts, entitlements, and pensions, for all nations. More importantly, it will be democratically represented by older voters across all nations. The voters within each nation will either participate in the government for national operations or participate in the government for managing debts and entitlements.

The government for debts and entitlements will need to allocate available funds to these debts, take on new debt, or negotiate for funds from the operational governments. The key difference from the current EU policy would be that all debts obligations are pooled into one common debt. This debt-managing government will have complete control over deciding to accept any new addition to the debt. For example, if some community wants to expand some benefit, it must convince this central government-of-debt to approve it.

The advantage of pooling the debts and obligations would be to normalize the benefits across different regions. If this has been in place a long time ago, any more generous benefits would be approved only if it were implemented uniformly over all regions. If that were not affordable for the entire EU, then it would not be approved. In current conditions, the benefits are not uniform across all nations. It is impractical to change this disparity immediately, but at least the government can prevent any new expansions that make the problem even worse. The new (imaginary) government will have the power to revise the terms of the old obligations as part of its allocation of available revenues to the entire set of obligations.

I am not seriously proposing a change to the EU from a focus of monetary policy to a focus on debt policy. I’m just using its example to describe how the parallel government may operate. The high debt Greece has to Germany illustrates a problem that may be solved by a government consisting of both Greek and Germany eligible voters who will jointly decide how to manage their collective obligations, accepting the current debt as a given but restricting new additions to the debt until they can find a manageable way to finance that debt and obligation. Eventually, there will be a need to ration the expenses for some obligations but this will be a collective decision of all eligible voters over all nations instead of making these decisions within each state individually.

I use the EU as an illustration for the very similar problems we have in the US where states and local governments have very high unfunded liabilities that eventually will require some drastic solution. In the US, these problems sometimes are discussed but never as dramatically as the international conflict between Greece and Germany. In other words, we have the same problem but without the international inter-cultural aspects that the EU faces. As a result, our problems are more harder to discuss.

My proposal for a parallel government specifically is meant for the US, though. In my discussions, the government of debt and entitlements specifically is limited to the national debt and federal entitlement programs. However, in practice, the local public debt problems will eventually become national issues. As states or cities run out of money to fund their pensions and other entitlements, they will request financial help from the federal government. The government of debts and entitlements will be the government that considers that request. It will balance the request with other demands and with available revenue.

It will have to make hard choices.

I suggest that these choices become more tractable because this government has no responsibility for operating the government. The decisions are based purely on the total debt from all sources and the total available revenue for servicing that debt. This division of government avoids the confusion of costs of operational government with the costs of managing obligations. The current debt problem is undoubtedly very difficult both for US and the EU. In the US the problem is currently more hidden because we currently have one budget that combines managing obligations with managing operations. By combining both costs in the same budget, we allow ourselves to be distracted to trim relatively insignificant operational costs while ignoring the far more dangerous debt costs.

Having two separate governments for operations and for debts will separate the two expenses. The government responsible solely for debts and entitlements will have to devote all of its political energy on managing just the debt and entitlements.

In summary, this post is a placeholder for some thoughts about the consequences of two parallel governments. In particular, there is a real risk that the two governments may come in direct conflict that may escalate beyond mere negotiation for financial transfers. The entire system can collapse into chaos. This prospect should encourage both governments to devise checks-and-balances internally with separation of powers with permanently distinct constituency. The governments need these separations to make it harder for some political party to gain control over the entire government in a way that would create a conflict crisis between the two governments. This risk of conflict may be beneficial to encourage compromise to find solutions for the major problem (such as the problems of excessive promises in the form of debts and entitlements).

Perhaps the parallel government approach is more fragile than our current unified government. Our current government will eventually face a crisis due to postponing a solution to the debt problem until it is too late. The alternative two-government approach may be able to avert this debt crisis but at the risk of an even sooner collapse due to making the conflict explicit as a conflict between age groups.